Judge Robet Lopez Cepero of the Cook Country Circuit declared the Affiliate Nexus Tax law, which was passed last year, violates the Internet Tax Freedom Act and the Commerce Clause of the U.S. Constitution, according to a statement published by the Performance Marketing Association (PMA), a not-for-profit trade association. Cepero said that affiliate companies that make sales or refer customers to an online retailer do not constitute enough of a nexus for tax purposes.
Several affiliate companies Amazon worked with, including CouponCabin, Brad's Deals and FatWallet.com, were forced to relocate to neighboring states as a result of the tax. CouponCabin CEO Scott Kluth told Crain's that it was too early to determine whether the company would move back to Illinois from its new headquarters in Indiana.
If upheld, the 2011 law would have allowed Illinois to collect an estimated $169 million in annual tax on sales made between out-of-state online merchants and residents in Illinois. The law was designed in part to level the playing field between brick-and-mortar stores and online retailers, a spokeswoman for the State Department of Revenue said in a statement to Crain's.